FTC issues ban on location data and bars information brokers from duties

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Following an investigation into the unauthorized use and sale of geolocation data by two companies, the Federal Trade Commission (FTC) in the United States has officially banned the collection and exploitation of such data by companies moving forward.

In response to complaints filed on January 9th of this year against X-Mode Social Inc and its successor Outlogic LLC, along with InMarket Media LLC, the FTC has prohibited both entities from selling sensitive location data. Additionally, a fine will be imposed on these companies for the unauthorized collection and commercial use of this information, done without obtaining the necessary consent from consumers.

Notably, X-Mode Social Inc had been selling the acquired geolocation data to government contractors under the guise of national security purposes, misleading users by assuring them that their location details would only be shared with advertising companies.

This is not the first instance of the FTC taking action against data brokers. In 2014, similar orders were issued against nine companies engaged in selling user information to marketing entities. During that time, the FTC proposed a plan to Congress aimed at enhancing transparency among data brokers. However, the momentum dwindled after 2020, just prior to the end of Donald Trump’s presidency.

Legal interventions like these play a crucial role in deterring and mitigating cyber-crimes to a certain extent. When sellers cease their activities, the demand for such illicit data gradually diminishes among criminals. Furthermore, if information is sourced from alternative channels, its price increases, making it less accessible to smaller-scale hackers who engage in phishing and ransomware attacks on the fly.

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Naveen Goud is a writer at Cybersecurity Insiders covering topics such as Mergers & Acquisitions, Startups, Cyber Attacks, Cloud Security and Mobile Security

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